Rebuilding Your Credit Score

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If you’ve recently failed a credit check, or had your last few credit card applications turned down, the chances are that your credit score is to blame. A low credit score can be caused by many different things, from missing a credit card payment a few years ago to being fresh out of college and having no credit history at all.

Finding out that your credit score is in poor shape can be a very worrying and frustrating experience, and unfortunately – the situation can’t be resolved overnight. However, your credit score can be re-built over time, but you’ll need to have a bit of patience. The following are just a few of the ways you can start to re-build your credit score:

1.  Get a credit builder credit card. This might sound like a horrible ‘Catch 22’ situation, but getting a credit card and using it responsibly over time is the perfect way to rebuild your credit score. But how do you get approved for a credit card when your credit score is too low for any lender to approve you? The answer is credit builder cards, which are specially designed for people with poor credit ratings. They tend to have higher interest rates and tiny credit limits, but if you spend occasionally and clear your balance in full each month you should have no problem. Besides, you’ll be showing lenders that you can borrow and repay responsibly, which will do wonders for boosting your credit score.

2.  Use your credit card properly. This means paying the full credit card bill every month, not just the minimum monthly repayment, staying well within your credit limit, paying all your bills on time and never, ever missing a payment.

3.  Check your credit file for mistakes. If the wrong information is on your credit file, it can harm your score. So, check your credit report for mistakes and inaccuracies, as well as cases of mistake or stolen identity and get any problems corrected.

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4.  Pay everything on time and wait. Time is the best remedy for a poor credit score, as only after a few years will things like bankruptcy, missed repayments and other bad borrowing behaviour start to fall off your credit report (your credit history only actually goes back around seven years or so). You’ll need to be as patient as you can to rebuild your credit score, making sure to remain a model borrower in the meantime.